Having been in the mortgage business since 2004, I can say with certainty there are no perfect people and therefore no perfect borrowers. Even though we are bombarded with what we should do, save 10-15% of our gross income, pay everyone on time, don’t get over extended, etc. Life happens.
For example, there have been 7 recessions in my lifetime. In the last 60 years, one third of the time the Dow Jones Industrial Average has been down overall for the year. We had Black Monday in 1987, the Great Recession of 2008-9, the economic impact of Covid 19, the dot com bust in the late 1990s, etc.
The point is, even those of us who are financially prepared suffer under the same circumstances. Life and its ups and downs affects all of us. Some recover faster than others based on their profession, education, experience or economic cycle.
Then there are the constant pressures of rising costs, inflation, job uncertainty, will Social Security be there for me when I retire, will I be able to afford medical care or long-term care should I need it? What if I outlive my money? Have I saved enough money for retirement? The list is overwhelming.
Even if you’ve followed Dave Ramsey’s baby steps or tried to, or whichever financial guru you follow, few people live with financial security as they get older. A recent article I read said that 46% of people entering retirement do so with a mortgage, the highest percentage in history.
Homeowners all have the same buckets of money that we draw from: wages, investments and home equity. Once we stop working, we are down to investments and home equity. Most seniors I speak with don’t want to touch their investments, and more and more people are open to tapping their home equity.
A senior homeowner with 50% or more equity can: 1. Eliminate their monthly PI mortgage payment, that right there gives them some breathing room in their budget. If they have more than 50% home equity, they can 2. Access their equity tax free 3 ways: a) lump sum; b) monthly payments; c) line of credit that earns compound interest. When they draw on the proceeds, they are paid directly to the homeowner and the homeowner can use the proceeds however they wish, except purchase an annuity.
So, why are people reluctant to tap their home equity? There are a few reasons. 1. They want to leave the house to their heirs (1% of children want their parents' home); 2. They were taught to pay off your home and not to have any debt, however in recent years fewer people own their homes outright; 3. Seniors have heard that reverse mortgages aren’t safe, are expensive, they can lose their homes, etc.
The truth is, a retirement mortgage also known as a reverse mortgage is the safest mortgage a senior can get. Why is that? They have to complete a 1-hour mandatory in person or phone counseling appointment with an independent 3rd party. When the reverse mortgage funds, about 50% of their home equity is protected from a market correction like we experienced in 2008-9. With a FHA backed reverse mortgage (aka HECM), the fees are set and capped by HUD. There is never a PI mortgage payment required. These are non-recourse loans, which means the only recourse the lender has is against the home, not against the borrower, their heirs or estate. There is no pre-payment penalty. And they retain ownership on title until they permanently move out. The loan term is age 150 of the youngest borrower!
When surveyed, 91% of senior homeowners said they want to remain at home and maintain their independence. Also, we know the number one fear a senior has is outliving their money. So, here’s what we have.
-senior homeowners who want to stay at home
-they fear running out of money
-many lived a reduced lifestyle while living on a fixed income
-they have investments they don’t want to liquidate
-and home equity that is frozen and not accessible
-they are making decisions about reverse mortgages from outdated and inaccurate internet info or uninformed neighbors or well-meaning family
When a senior homeowner takes the time to learn about how a reverse mortgage can help them. Their reactions are these: 1. What’s the catch? This sounds too good to be true and 2. How come everyone isn’t getting a reverse mortgage?
The best thing to do is to explore all options to see if a reverse mortgage makes sense for you. The qualifications are senior friendly, and we can usually close in 30-45 days.
Explore your options and see how a reverse mortgage can change your life.
A retirement mortgage doesn’t have to be complicated when you have a professional help you along the way. Contact our team today to get the wheels in motion a
Perhaps your loved one doesnt want to have to stay in a skilled nursing facility after being discharged from the hospital. Or, other than needing daily medical care, they prefer to live independently in their own private residence. In such cases, they might be able to receive skilled nursing care right in their own home. Provided they have the financial means to do so, seniors and their families can hire licensed home health aides to help with various medical procedures, such as:Health monitoringOccupational, physical, and speech therapyBlood draws and injectionsFeeding tubes and cathetersIV dripsWound careThe national median cost of hiring a home health aide is currently $4,576 per month. Keep in mind that the types of home nursing care services that are available will vary depending on state laws, as well as the agency. Furthermore, custodial services such as assistance with ADLs, cooking, cleaning, etc. are separate from skilled nursing services and will cost extra.AmenitiesSkilled Nursing FacilityNursing Home CareMedical CareYesYesAssistance with ADLsYesNot typically available (unless part of the medical condition). Would have to arrange separately/pay extra.MealsYesNot typically available. Would have to arrange separately/pay extra.Activities & EntertainmentYesYes
These days, many people who are initially searching online for nursing homes in their area are actually a better fit for an assisted living community. But what is the difference?Assisted living communities are for seniors who dont need regular medical care but do require assistance with activities of daily living (ADLs). Residents live in private apartments with senior-friendly features like bathroom grab bars, barrier-free doorways (to accommodate wheelchairs / walkers), and alert buttons. They receive assistance with ADLs, enjoy three daily meals (plus snacks), and can participate in a wide array of different community activities such as book clubs, exercise classes, game nights, field trips, etc.Many assisted living communities also include on-site amenities like a library, beauty salon, gardens or walking paths, gym, etc. Residents may keep their own car, but many often prefer to make use of the communitys transportation service/public transit to shop or attend medical appointments.Nursing homes offer many of the same services and amenities as assisted living communities but are for seniors who have more comprehensive care needs or need daily medical care and 24/7 supervision by licensed medical professionals.As previously mentioned, nursing homes are the only form of senior living that can provide 24/7 medical services. Like memory care communities for residents with Alzheimers or other dementia related illnesses, many nursing homes also include increased safety measures for residents with memory issues / dementia.The level of medical care provided in an assisted living facility versus a nursing home is also reflected in the price. According to the 2021 Genworth Cost of Care Survey, the national monthly median cost for assisted living is $4,429. Meanwhile, the national monthly median cost for a private room at a skilled nursing facility is $9.086.
It is estimated that 70% of all of us who reach age 65 will need some level of Long-Term Care. Here in Colorado, the average cost for Long Term Care is $8,758 per month according to 2020 state information. By nature, only about 15% of us are wired for advanced planning. So, this article is for the rest of us. Not planning in advance causes, us to avoid the issue until we can no longer care for our loved one or worse yet, we become a caregiver who is injured in the process or worn to a frazzle by 24-hour caregiving. Often, we avoid planning because we are afraid of learning that we may lose everything paying for care. Here are some practical things to know and to do now so you can stop worrying about the cost of Long-Term Care for yourselfor for ones you love.Things to Know: There are ways to get care paid for here in Colorado and still preserve hard-earned assets. Health First Colorado will pay for in-home care, including paying a family member to provide care. They will pay for assisted living, full skilled care, and adult day care. Meeting the qualifications for programs if you have assets can be tricky but, with education (and that can be free) you can quickly learn the rules that apply to your financial situation. The VA through Aid & Attendance will also help pay for costs if you served during wartime.Things to Do:Find someone who can give you accurate information. Google: VA & Medicaid Education Colorado and the BBB. Read what others say about these companies. The BBB checks companies out thoroughly and the BBB has an AGE FRIENDLY designation if the company has been approved as trustworthy for the senior population.Find a firm that understands VA & Health First Colorado Programs. If the firm only knows one program, you wont get the full picture.Find a firm that can refer multiple attorneys since legal documents and advice may be needed. Find a firm that will give you information and options at no cost so you can decide what is best for you.